Financial Data and Key Metrics Changes - For Q2 2025, comparable sales decreased by 1.9%, showing a nearly two percentage point improvement from Q1 [32] - Net sales were down 0.9% year-over-year, which was nearly two percentage points better than Q1 performance [40] - GAAP and adjusted EPS for Q2 were $2.05, down from $2.57 a year ago, primarily due to inventory adjustment and tariff-related costs [44] Business Line Data and Key Metrics Changes - Digital channel comparable sales grew by 4.3%, with significant strength in same-day delivery, which increased by over 25% [33] - The Fun 101 initiative led to over 5% growth in hardlines, marking the strongest quarterly comp in this category since 2021 [34] - Trading card sales increased nearly 70% year-to-date, positioning the company as a top market share player in that category [34] Market Data and Key Metrics Changes - The company gained or held market share in 14 out of 35 subcategories tracked so far this year [41] - The food and beverage categories saw slight year-over-year growth, driven by new floral offerings and trending flavors [35] Company Strategy and Development Direction - The new CEO, Michael Fidelke, emphasized the need to reestablish merchandising authority and improve guest experience [18][19] - The company plans to leverage technology to enhance speed and efficiency across operations [23] - A focus on style and design will be central to the company's strategy moving forward [67] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that results over the past few years have fallen short of expectations and emphasized the urgency to improve performance [7][12] - The leadership team is committed to returning the company to growth and improving the shopping experience for guests [53][55] - The company expects to navigate the current tariff environment and is optimistic about ending the year in a healthy position [11] Other Important Information - The company announced a succession plan with Michael Fidelke becoming the next CEO at the start of the 2026 fiscal year [5][6] - The company is investing in technology and process improvements to streamline operations and enhance the guest experience [49] Q&A Session Summary Question: What price increases were taken during the second quarter due to tariffs? - Management indicated that they are working hard to mitigate tariff impacts and will take price increases as a last resort, focusing on maintaining competitive pricing [58][59] Question: How does the succession plan bring about change to improve business trajectory? - The new CEO highlighted the importance of leveraging his extensive experience with the company to focus on style and design as key growth drivers [66][67] Question: What investments will be necessary to close the performance gap with peers? - The company plans to continue investing in high-return projects, including new store openings and technology enhancements [72][75]

Summary of the Conference Call for Mao Geping Company Company Overview - Mao Geping Company reported a total revenue of 3.885 billion yuan in 2024, representing a year-on-year growth of 35% [3] - The adjusted profit was 920 million yuan, with a growth rate of 40%, while the net profit reached 880 million yuan, growing by 34% [3] - The company's main business is focused on color cosmetics, with color cosmetics revenue at 2.3 billion yuan (59% of total revenue) and skincare revenue at 1.43 billion yuan (37% of total revenue), showing a decline of 3.4 percentage points year-on-year in skincare revenue [2][3] Key Points and Arguments - **Sales Channels**: The sales distribution is relatively balanced between online and offline, with online sales accounting for 46% and offline for 53% [2][3] - **Growth Rates**: Offline sales grew by 22%, while online sales surged by 51% [4] - **Skincare Product Performance**: The growth rate for skincare products weakened in the second half of 2024, with only a few percentage points increase, attributed to adjustments in product strategy and operational rhythm [5] - **Future Outlook for Skincare**: The company remains optimistic about the future of skincare, planning to increase promotional efforts on platforms like Douyin in 2025, aiming for skincare's share to rise above 40% [6] - **New Product Launches**: In May 2025, the company launched a new perfume, which performed in line with or slightly above expectations, with some popular SKUs experiencing stockouts [7] Market Sentiment and Future Projections - **Market Focus**: Current market attention is on the proportion of skincare products and their future growth certainty, as well as the company's operational rhythm [5] - **Investment Outlook**: Guohai Securities maintains a positive outlook on the Mao Geping brand, predicting a growth rate of around 30% over the next three years and close to 20% over five years, indicating a relatively high degree of certainty [8] - **Stock Unlocking Events**: The company has stock unlock events scheduled for June and December 2025, which may create opportunities for exits or new entries in the market [4][8] Additional Important Insights - **Product Strategy Adjustments**: The company acknowledges that the previous lower proportion of skincare products was related to product strategy and marketing rhythm, which is expected to improve with increased marketing efforts [6] - **Sales Performance of Key Products**: Key products like sunscreen and caviar essence series have shown strong performance offline, although their online exposure has been limited [5]